Hospitals balk at paying for Medicaid expansion

Jun. 26, 2013

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If South Dakota expands Medicaid to provide health coverage to tens of thousands of low-income citizens, should hospitals have to pay part of the bill?

Some state officials have put that idea on the table, but a representative of the state’s hospitals tried to head off such a proposal Tuesday.

Speaking at a task force studying Medicaid expansion, Dave Hewett of the South Dakota Association of Healthcare Organizations said hospitals already were helping to pay for Medicaid expansion under a national deal made before the Patient Protection and Affordable Care Act passed in 2009.

“Early on with the (Patient Protection and Affordable Care Act), many, many dollars were taken away from providers to pay for expansion,” Hewett said. “We’ve already given, and we’ve given substantially.”

South Dakota hospitals, he said, will pay $15 million next year as part of a deal to pass the Affordable Care Act — and more than $30 million in future years. Hewett calculated that hospitals would save about $30 million in uncompensated care if Medicaid eligibility were raised to 138 percent of the federal poverty line.

Before Monday’s hearing, a senior adviser to Gov. Dennis Daugaard said the question of hospital payments was an important discussion point.

“The providers, and by that I mean primarily the hospitals, should benefit from this because it will reduce their charity care,” said Deb Bowman, the chairwoman of Daugaard’s Medicaid task force. “So should we ask that providers have some skin in the game here besides their Medicaid rate?”

Hewett said his group would be opposed to hospitals paying more as part of a Medicaid expansion bill. But he wasn’t sure whether that position would hold if it were the only way to get an expansion deal done.

“We’d have to cross that bridge when we came to it,” Hewett said.

Medicaid expansion is provided for by the Affordable Care Act. Currently in South Dakota, only the elderly, the disabled, children and pregnant mothers qualify for Medicaid support. If the state expands Medicaid, then an estimated 48,000 low-income adults could become eligible for the government health insurance system.

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The state’s hospitals and other medical providers are strong proponents of expanding Medicaid, saying it will benefit both the state and control their expenses. Leaders with both the Avera and Sanford health systems testified in favor of expansion Tuesday.

Others of the almost 20 members of the public to testify Tuesday gave personal anecdotes to support Medicaid expansion. Cindy Franklin of Flandreau told about how she was diagnosed with cancer while uninsured.

“Unable to pay, I had to rely completely on the goodwill of the cancer center to cover the costs of my lifesaving treatment,” Franklin said. “Cost shouldn’t be a determining factor in whether someone or not someone beats cancer and remains cancer-free.”

But plenty of citizens argued against expanding Medicaid, too. Some cited the cost to the federal government, which would amount to about $2 billion over the next 10 years just for South Dakota if the state expanded eligibility.

“I believe the federal government will become even more unreliable as a funding source,” said Jim Holiway of Sioux Falls. “Now is not the time to expand government, which the Medicaid expansion is.”

Others said they were open to the government taking steps to help the uninsured, but that Medicaid was the wrong way to go about it.

State Rep. Leslie Heinemann, R-Flandreau and a practicing dentist, said Medicaid’s reimbursement rates for medical professionals are so low it often doesn’t cover costs.

“Why should the feds give that group (of 48,000) a second-class system of care?” Heinemann said.

But he suggested he could support a compromise approach that several other states are exploring for their own Medicaid expansions. Iowa and Arkansas are seeking waivers from the federal government to put some of their low-income workers not into Medicaid but into the Affordable Care Act’s health insurance exchanges.

It’s also more expensive to the government than Medicaid, with Bowman saying one estimate is that a Medicaid patient will cost about $6,000 per year to cover while a patient on the exchange will cost about $9,000.

Those other states also haven’t yet received final approval from the federal government to pursue their alternatives, with many details left undecided.

But Daugaard’s Medicaid task force is taking a careful look at those alternative proposals, as well as the question of whether hospitals should pay part of the bill, as it develops a report on the subject that’s expected to be finalized late this summer.